Friday, September 10, 2010

How we incorporated our business

Must be something in the air but at least a dozen young entrepreneurs have asked me, “How can I go about incorporating my business?”

It is a wonderful thing for the economy when someone decides to venture into the world of entrepreneurship but it can also be very overwhelming. Sole proprietorship or corporation? What name should I use for my business? What logo? Should I trademark my logo? Incorporating federally or provincially? It all becomes very overwhelming but thankfully there are FREE resources available to help answer those questions.

When The Network Hub was conceived, my two partners and I were students, so, there was no way we could afford lawyers to take care of everything. Although, depending on your business, you should DEFINITELY be talking to a startup/business/incorporation lawyer.

Jay, John and I have had experience working together and we previously incorporated for our other company so we were familiar with the process. To register your business name, you have the option of going in person to Small Business BC or submitting your business name online with BC Registry Services. Now here is the odd thing, you would think submitting would be a 24/7 service – nope, not with BC Registry Online. BC Registry Services operates from 6 am to 10 pm Monday-Saturday and from 1 pm to 10 pm on Sundays.

We opted to go in-person because we wanted to incorporate our business name. Now, when your company is incorporated, the name is checked against a list of registered corporations in BC to ensure there are no duplicates. We wanted to consider all possibilities of our company name submission, so that it would not rejected because that means $49 gone to waste and we would have to resubmit. With proprietorship or partnership, business names are not protected so you can have multiple companies with the same names. (Note: if you feel overwhelmed already, get yourself a good lawyer to incorporate for you)

Once we got the approval letter mailed back from the BC Registry Services, we went ahead and started the incorporating process. You have 56 days from when your business name is approved to decide on a business structure, otherwise, you have to submit AGAIN for approval – another $49 dollars. If you have no idea which business structure is right for you – go to Small Business BC, Google it.,or consult a lawyer.

Sole proprietorship. If you plan to operate the business on your own, either under a business name or your own name

Partnership. If you plan to operate the business with one or more partners

Corporation. If you plan to operate the business as a separate legal entity, separate from yourself and your personal assets

Society. If you plan to operate a not-for-profit organization, in which any funds or profits will be used only for the society’s purposes

Co-operative. If you plan to operate a business that is owned and democratically controlled by the people who use and benefit from your services

A major difference between a corporation and a sole proprietorship or partnership is that, in a corporation, no individual person is responsible or liable for debt (unless specifically outlined in a contract or legal document for your business). Also, if any members of your business leave or are replaced, it won’t affect the business as a whole and operations can continue, uninterrupted.

For us, we chose to incorporate because of liability protection and tax-benefits. You have two choices when it comes to incorporating: self-incorporation online at Corporate Online or consult a lawyer. While we would have loved to have a lawyer to take care of this process for us, it wasn’t possible with all the expenses of starting up a business. So, we decided to register the business ourselves.